Questions regarding globalisation (1 Viewer)

[kt8]

'It is usual for a rise in world commodity prices to lead to an appreciation of the Australian dollar and for a fall in world commodity prices to lead to a depreciation of the $A.'

How does this work?? Why does a rise in world commodity prices lead to an appreciation of the $A?

Please help.

 

[azza_3761]

Since world commodity prices are increasing more foreign investors decide to invest into Australian commodity markets. This leads to an increase in investment which results appreciation of our dollar

 

[Jago]

Because australia sells commodity on a global scale.